Why T-Mobile Is Growing Faster Than Verizon, AT&T: Jeff Kagan

Jeff Kagan  |

Image source: T-Mobile

The reason T-Mobile is growing faster than Verizon Wireless and AT&T Mobility is simple, but it's not what you think. It’s not that it has a better network or lower costs. The reason is that, over the last several years, T-Mobile started to upgrade its network and it started marketing better. It’s really that simple.

For a long time, Verizon and AT&T were simply better and had the most customers. Now that T-Mobile is growing, it is catching up.

Yesterday, there were four big wireless carriers in the United States: Verizon, AT&T, Sprint and T-Mobile. While Verizon Wireless and AT&T Mobility led the way with customer acquisitions, revenues and spectrum, Sprint and T-Mobile struggled for survival.

In recent years, T-Mobile has been doing things better. Now, with its acquisition of Sprint and its spectrum, it is positioned to continue to grow and do better.

T-Mobile was dying and had no place to go but up

While Verizon and AT&T remain the two largest and strongest wireless carriers in the United States, they no longer show strong growth. Not that they did anything wrong. It’s just they had won the most customers in the country, so quite naturally growth slowed down.

Now, growth is coming from a rejuvenated T-Mobile, and it is rushing to catch up. Several years ago, the company was struggling for survival with negligible market share. Then, under a new CEO, life was shocked back into T-Mobile, and it started to grow.

Next, after many attempts over many years, T-Mobile eventually acquired Sprint and all of that company's wireless data spectrum. Sprint had loads of wireless spectrum, but it simply had trouble growing.

Sprint showed it takes more than just spectrum to succeed

So, it’s not just spectrum which made a company strong. It was also good marketing, advertising and public relations.

T-Mobile had plenty of marketing and advertising, but very little spectrum. Sprint had loads of spectrum, but had trouble with marketing, advertising and PR.

Together, the combined company now has both, and that is the reason it is seeing growth.

Wireless data spectrum is key to growth going forward

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Going forward, as we move further into 5G, wireless data spectrum is a very important piece of the puzzle for every carrier.

T-Mobile, after acquiring Sprint and all of its spectrum has just what it needs. During the most recent spectrum auction, T-Mobile only purchased 142 licenses.

Compare that to Verizon with 3,511 and AT&T with 1,621 licenses. That means T-Mobile spent only a small amount compared with AT&T and Verizon.

Next, more will be spent on upgrading the network, something that every carrier must do.

That means all three wireless networks, Verizon, AT&T and T-Mobile, will continue to build and to grow going forward.

Verizon, T-Mobile, AT&T Investor and Industry Analyst meetings

Verizon, T-Mobile and AT&T held analyst and investor meetings last week. They spelled out their plans moving forward in more detail.

All three have solid plans for growth and expansion into 5G and beyond. It will take time and money, but each is heading in the same direction. The right direction.

Whether or not that means you will have 5G where you spend your time, early in this transformation, is the question. And there is no way to tell unless you compare the signal of each in the areas you live, work and shop.

The good news is all carriers are rushing to try to be the leader in 5G as quickly as possible.

The bad news is the upgrade will take several years and be very costly for each carrier.

Wireless carriers should cut costs like surgeons, not butchers

The choices each makes to cut costs should be a concern for investors. If they cut costs carefully like a surgeon with a scalpel, they will be better off compared to a butcher with a cleaver.

Since T-Mobile had fallen so far behind Verizon and AT&T with 3G, it had no place to go but up. Its recovery and its acquisition of Sprint with its spectrum put T-Mobile in a good place as we enter the next generation of 5G wireless.

Verizon and AT&T are upgrading at their regular pace. Their spectrum acquisitions will give them the opportunity to be strong competitors in the 5G marketplace.

This makes it seem like T-Mobile is growing faster than Verizon and AT&T, but that’s not what is happening.

T-Mobile is growing rapidly, and that is good news for the company, but both Verizon and AT&T have been leading the wireless industry and have the vast majority of customers.

This is what T-Mobile has in its sites.

5G wireless industry shows solid growth and strength

So, today I see the wireless industry having three strong competitors with Verizon, AT&T and T-Mobile. This compares to yesterday when we had two strong competitors and two weak ones.

I am thrilled to see a strong, robust and growing wireless industry.

The wireless marketplace remains one of the strongest and most rapidly growing spaces going forward.

This applies to the entire ecosystem: the wireless carriers, the smartphone and tablet makers and the other companies in other industries as well.

Remember, 5G will enable other industries for growth. Consider self-driving cars, connected cars, TeleHealth, TeleMedicine, retail and so much more.

The next decade will also be incredibly exciting for growth in many different industries using wireless to transform to the next level.

Today, all three wireless carriers are positioned very well to take on that challenge and see that next level of growth.

 

Jeff Kagan is an Equities News columnist. Kagan is a Wireless Analyst, Technology Analyst and Commentator who follows Telecom, Pay TV, Cloud, AI, IoT, Tele Health, Healthcare, Automotive, Self-Driving cars and more. Email him at jeff@jeffKAGAN.com. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan and LinkedIn www.linkedin.com/in/jeff-kagan/

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Equities Columnist: Jeff Kagan

Source: Equities News

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer. The author of this article, or a firm that employs the author, is a holder of the following securities mentioned in this article : None

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